Best Practices in Incubator Infrastructure and Innovation Support

Transcription

1 Follow-up of Concerted Actions 2 & 3 Support Services to SMEs Best Practices in Incubator Infrastructure and Innovation Support Espoo, Finland, November 19-20, 1998 FINAL REPORT

2 Best Practices in Incubator Infrastructure and Innovation Support Preface The Ministry of Trade and Industry Finland together with the European Commission DG XXIII, are pleased to present to you the results of the seminar Best Practices in incubator infrastructure and Innovation Support, which was held in Espoo on the 19th and 20th of November The seminar was organised by the Otaniemi Science Park Ltd. The event took place as a follow-up to Concerted Actions 2 and 3 between the Member States of the European Union and the European Commission. One of the features of the Enterprise Policy, at a European level, is the Concerted Actions, which promotes the exchange of best practices between Member States. The Concerted Actions aim to increase the efficiency of Member States actions in the improvement of the business environment and in the stimulation of business support measures through sharing experiences and examining the results of different actions on the ground. A number of follow-up seminars in 1998, under Concerted Actions 2 & 3, dealt with three important categories of support measures which were identified at the Madrid Forum: finance, training, and infrastructure (particularly in launching technology based enterprises). The first of the series was a seminar in Rome, in February 1998, on the problems of guaranteeing quality in support services provided to business. The next seminar was on training for starts-ups in Stockholm, in May, followed by a seminar in Madrid, in June, on issues related to finance for start-ups. The final seminar, in Helsinki, is on support for innovative enterprises in the start-up phase. The aim of the Best Practices in Incubator Infrastructure and Innovation Support seminar was to provide an extensive picture about the present state of the incubator industry in Europe. The business incubator industry is a powerful tool for the creation SMEs, for supporting them in start-up, and for increasing their growth rate. The seminar sought to provide an opportunity for exchanging best practices and new ideas between the Member States. General and case presentations were included in the programme. Networking among the incubators was encouraged through workshops and excursions to local incubators. Three parallel workshops discussed the following topics: Finance for Incubator Infrastructure and Innovation Support Good practice in Incubator Infrastructure and Innovation Support The Role of Incubator Infrastructure as a Facilitator for Technology Transfer

3 Summary of conclusions Workshop 1: Finance for Incubator Infrastructure and Innovation Support Recommendations to EU 1. Provide patient public funding support for incubator projects. 2. Establish clear criteria for public funding support. 3. Facilitate the development of networks of individual incubator projects with the aim of achieving critical mass sufficient to attract the private sector, particularly in the development of training and support services. 4. Encourage, through tax incentives, greater private sector funding of incubator projects recognising that such funding may not be forthcoming until the project is fully developed and mature. Workshop 2: Good practice in Incubator Infrastructure and Innovation Support Recommendations to EU 1. An impact study on incubators should be carried out. 2. Undertake a benchmarking study (perhaps by a small group of incubator managers) with the objective of preparing a manual of good practice, available in both hard copy and via the internet, that can be made available to anyone running or starting an incubator. 3. Provide finance for feasibility studies and business plan development for new companies. 4. Encourage educational institutes to be available to assist prospective entrepreneurs when asked. 5. Facilitate web site to enable incubator tenants to engage in cross-border cooperation. 6. Provide finance to stimulate innovation amongst small businesses. Recommendations for Incubators / Business Centres 1. Build, maintain and utilise networks. 2. Develop cross-border partnerships. 3. Assist tenants to identify and develop their own partnerships. 4. Strive to establish appropriate finance arrangements to benefit tenants.

4 Workshop 3: The Role of Incubator Infrastructure as a Facilitator for Technology Transfer General recommnedations for Incubators / Business Centres 1. Commit the industrial companies. 2. Note the importance of the public image of the incubator. 3. Help the academics to understand that the operations carried out by the incubator do not imply waste of time. 4. The incubator should be a technology transfer demonstration site. 5. The incubator should be a place of exercise and a place of support for educating the professors and the students. Recommendation on incubator networking There is now sufficient experience with incubators to know how they should fit into the process of local economic development, what should be their core services and what standards they should achieve in delivery of these services. Pooling of this experience should lead to high standards everywhere. Recommendation to adapt quality approach The incubator should aim to ensure the most effective support possible for enterprises. Increase the competencies and the professionalism. Create opportunities for thinking and evaluation. Mobilise the operational teams. Allow the ability to be able to measure the difference between our offer and the expectations of the customer.

5 Table of Contents Seminar Introduction...1 Report from the discussions...9 Workshop 1: Finance for Incubator Infrastructure and Innovation Support...9 Workshop 2: Good practice in Incubator Infrastructure and Innovation Support...12 Workshop 3: The Role of Incubator Infrastructure as a Facilitator for Technology Transfer...16 Workshop 1: Finance for Incubator Infrastructure and Innovation Support...20 Financial Support for Innovation Support -A Northern Ireland Perspective...20 Financing a Regional Virtual Technology Park...24 Incubator finance - Case example from France...27 British experience with financing business incubators...29 Incubators in Helsinki Region...34 Workshop 2: Good practice in Incubator Infrastructure and Innovation Support...36 Innovation Support in Incubator Centres of Northern Germany...36 A new Danish Program to Stimulate Innovation...41 New Technology-based firm creation and Incubation at Taguspark in Portugal...45 Good Practice in Establishing an Incubator...46 Practical experience from a technology spin-off from the University of Jyväskylä...48 Workshop 3: The Role of Incubator Infrastructure as a Facilitator for Technology Transfer...52 Technology Transfer from University to SMEs...52 BIC's Networking for Co-operation - The Spanish Model (ANCES)...56 Networking: Collaborate to grow...60 The Networking strength in professional organisation in incubators: The French NORM Technology Incubator Activities in Finland...69 Reports from the Excursions...71 Theme Technology...71 Theme Art and Design...72 Theme Tourism and Services...73 Appendix A: The programme...74 Appendix B: List of participants...78

6 Seminar Introduction Antti Kalliomäki, Minister, Ministry of Trade and Industry, Finland Ladies and gentlemen! A robust business culture is important both for employment and for economic competitiveness and growth in Europe. Improving and promoting entrepreneurship and new enterprises, and indeed the operating potential for small and medium-sized businesses in general, is essential at all levels of the EU. Promoting entrepreneurship has a vital role to play in correcting Europe's employment situation. We need new businesses to generate new products and revenues, and with them new jobs. Numerous EU programmes have been set up for just this purpose. The Multi-annual Programme for SMEs and the other programmes and initiatives to encourage SMEs and craft businesses are proof of this. The strategies laid down for SMEs underline the importance of improving general operating conditions for such businesses and for entrepreneurship. They stress, for instance, the need to simplify administrative procedures, to improve the economic environment for small businesses, to encourage SMEs to 'think European', as well as 'think international', to promote competitiveness, to further research and innovation, and to foster use of and training in information technology. The EU strategies, in order to boost entrepreneurship and the operating potential for SMEs, largely coincide with the national aspirations of the various Member States. Naturally enough, this consensus, at different levels in Europe, derives from the fact that the EU Member States operate in a single market in the same kind of environment. However, it has been noted that European businesses still operate in an extremely complicated administrative environment. The resources SMEs have for dealing with various administrative procedures are limited, and this may well hamper their establishment and development. The shortage of capital for SMEs has also been noted, together with problems in getting loans and various other cost factors that hold back their growth. A great deal of work has been done to promote the Europe-wide internal market and good results have been achieved. However, a lot can still be done to improve the opportunities for SMEs to operate in European markets. Economic integration in the EU, economic and monetary union, and the introduction of the Euro will all help SMEs to Europeanise, and also give them the means they need to operate in markets outside Europe. A large proportion of funding from EU Structural Funds goes into projects to encourage entrepreneurship. Money allocated for technological development has certainly helped promote the competitiveness of small businesses. However, this activity can and should be intensified further, by focusing resources on work to promote competitive new business operations. We must make every effort to exploit such new development opportunities in the business environment to the full by promoting entrepreneurship and improving the competitiveness of small businesses. This seminar is a follow-up to the Concerted Action 2 Forum in Madrid, in 1995, which considered 'Support measures for the creation of SMEs and assistance to young -1-

7 entrepreneurs'. At the Forum, the working group for support infrastructure gave preliminary consideration to business incubators, technology parks, etc. as instruments in promoting innovative businesses. We consider it important for there to be further discussion of this area of action at this seminar, and that we are all provided with examples of 'best practices' for use in our own national development efforts. At the Madrid Forum, one important theme was the promotion of entrepreneurship and business by increasing training and consultation, and by developing funding options. Various ways of promoting business incubators were also discussed. The European Council meeting in Cardiff, in June of this year, also dealt with ways of improving and simplifying the operating environment for small businesses. It also considered ways of encouraging entrepreneurship in Europe. Steps are now being taken at both the EU level and the national and regional level. One important goal is to create and foster a culture that encourages entrepreneurship and builds a firm basis for the permanent growth of entrepreneurship and business activities. An equally important stage, which is in process in order to develop entrepreneurship and the operating potential for small businesses, has been the report by the BEST Task Force and the Commission Communication and Action Plan which succeeded it. The Communication stressed the importance of a new approach to training and the workplace, of making funding available and promoting innovation, and of a government climate conducive to entrepreneurship and business development. The Action Plan suggests measures for the Commission, the Member States and the regions. It also mentions the present incubator seminar as an important joint project between the Commission and the Member States in their drive to improve conditions for businesses. Public programmes in the EU Member States also stress the need to improve operating conditions for entrepreneurs and SMEs. Following recognition of the vital link between encouraging entrepreneurs and SMEs, and boosting employment in Europe, this has been an important component in national employment programmes. Finland's own national policies for business and industry strongly underline the importance of entrepreneurship and a clear SME policy. The practical framework is outlined under a Government Resolution in a special programme on SME policy. The measures specified concern improvements in the operating environment for businesses, workplace development in enterprises, and formulation of a public action package to encourage SME growth and competitiveness. The lines of action laid down in the Finnish SME programme are ran largely in parallel with the EU's objectives. The role played by small businesses as employers is gradually growing, and the number of such enterprises is also rising sharply. Small and medium-sized enterprises are crucial for the economy and will be essential if we are to achieve our job creation goals. SMEs generate approximately 40 percent of our GDP and currently account for approximately 60 percent of all jobs in business and industry. In encouraging profitable enterprises with real growth potential, it is important in the present competitive environment that we invest in boosting know-how at a very early stage of business operations. Finland is particularly interested in developing knowhow-intensive businesses. Our focus is on enterprises and entrepreneurs that can find market applications for new technologies. The percentage of GDP that Finland invests -2-

8 in research and technological development has more than doubled since the early '80s. However, we aim to raise it still further, up to 2.9 percent by 1999, a goal that we seems likely for us to achieve. We are also extremely pleased to report that companies have increased their own input in product development. Other measures to create better conditions for innovative companies include our centres of expertise programmes, in which over ten are already under way. As I just noted, we are focusing on know-how intensive companies, so it is very important that we use instruments that will encourage innovative new enterprises, which are developing new technology. Business incubators offer an extremely interesting solution to this problem, and they are attracting increasing attention throughout Europe, as well as elsewhere. The Commission has been very active in this respect, and we find this very worthwhile. The present seminar is a good example of the Commission's active role, and of how it co-operates with Member States in attaining our common goals. Ladies and gentlemen! I should like to welcome you all, and especially thank the Commission for making it possible for this seminar to be held here in Finland at Innopoli. Directorate General XXIII has made an important contribution to organising and funding the seminar, and we hope that it will achieve the shared goals of Member States and the Commission in promoting entrepreneurship and SMEs and in increasing the competitiveness of the EU as a whole. -3-

9 Seminar Introduction L.D.M. Mackenzie, Director, DGXXIII, European Commission I would like to begin by conveying to you the best wishes of Commissioner Papoutsis for a successful seminar. I have no doubt that these wishes shall be amply fulfilled. Thanks to the Finnish authorities, who have organised this seminar, and particularly to the Finnish Ministry of Trade and Commerce, the Otaniemi Science Park, the city of Espoo and Innopoli. We have been provided with this opportunity to bring to a close the preparatory phase of our Concerted Action on support services in the start-up phase of enterprise development. Thanks are also due to all of you who have been nominated, not just as technical experts, but as practitioners of the very examples of best practice that we will be discussing over these two days. We will be able to draw on first hand experience in comparing different methods of using incubators as a support for start-ups. Thanks to the Chairmen, rapporteurs and speakers for the various themes which will give us the knowledge and analytical capacity in order to draw the correct conclusions. With such a combination how could we possibly fail to make this seminar a success? In fact, this seminar is the last in a series of seminars on support services in the start-up phase of enterprises organised under the Third Multi-Annual Programme in favour of Small and Medium Sized Enterprises. These seminars are placed in the framework of what we call Concerted Actions. Concerted Actions essentially rely on Member States and the business community exchanging information, knowledge and experience and trying to learn from each other how to better succeed. The end result will be the identification, publication and dissemination of best practice. In all this, the Commission acts as co-ordinator and catalyst. The input is primarily and essentially yours. This is the conclusion of a process, which was begun in Madrid in This year we have already held three seminars - in Rome on guaranteeing quality in support services, in Stockholm on training for start-ups and in Madrid on finance issues. Now we have Helsinki on Incubator Infrastructure and Innovation Support. This year marked a breakthrough in our work on these issues. In both Stockholm and Madrid we were able to identify a series of good practices which we believe could make a significant contribution to enhancing the effectiveness of business support services in the European Union - provided they are understood and adopted outside their place of origin. We intend after this seminar, from which we expect an equally important breakthrough, to publish a booklet in all EU languages. The booklet will be circulated to business support services, be promoted through the E.I.C.s (European Information Centres) network and be made available on the Internet. -4-

10 We are concentrating in the next two days on incubators and technology parks. The concept of using incubators to encourage start-ups is now widely spread throughout the EU. Yesterday, Mr Santala told me that when Finland started their incubators in Espoo they had reached the conclusion that this was a good way to move forward independently and in complete isolation. He had been surprised to learn some time later that Twente University, in the Netherlands, was doing something very similar. Curiously, the report from the BEST Task Force, which gave the Commission and the Member States many useful and practical suggestions on how to improve the business environment, mentioned France, Germany and U.K. as having the best practices worthy of dissemination. This diversity of appreciation shows how necessary coordination was. Now this seminar brings together many of those who have instigated or managed the best practices in their countries. We expect this seminar to deliver concrete results by comparing and evaluating all these diverse experiences. Although innovation will be a central element in our considerations, incubators are not exclusively devoted to high-tech or innovative companies. The visits organised for tomorrow morning demonstrate that clearly and I am grateful to the organisers for giving us this opportunity to examine the width of the incubator methodology. In this respect, science and technology sectors are rather well organised and can form incubators more readily than most. It is perhaps the strength of organisation, which needs to be shared in an extension of these experiences. We must, of course, talk about innovation and the linkages between incubators and technology parks. The transmission of research results and technological developments from the laboratory to the market place is regularly identified as one of the biggest obstacles faced by European enterprises. In my home country we are very proud of the number of overseas companies from the United States, Japan or South Korea who invest in order to benefit from our skilled and well-educated labour force. We are well aware of the benefit to be gained from these companies in the information technology and bio-technology sectors, which bring knowledge, and experience which will feed back into our centres of learning and our supplier industries. Yet, these same centres of learning are not able to exploit commercially their own research results. Take one flagrant example: Beta-blockers were discovered in a Scottish University, yet no company in the U.K. produces betablockers today. This entire pharmaceutical revolution developed inside the European Union has been exploited and marketed from outside. The problem is widespread. The French Government has just announced its intention to remove restrictions on academics setting up companies to produce and market the results of their own research. If such initiatives are to succeed we need to revise our views of the merits attaching to developing the entrepreneurial end of the innovation process. The traditional academic and research jealousies about who thought of what first are unhelpful. In a competitive market the successful entrepreneur is the one who compares and co-operates with the competition because he or she knows that the stimulus they receive will make their own company more competitive. Remember that Microsoft's success was built on sharing the product, not by direct marketing. -5-

11 The relevance of this to our discussions today is that while we are concluding one phase, we are already opening the next one. When a new enterprise emerges, fullyfledged, from the incubator with its grouping of different support services, its contacts with the different technical advisers and its network - must it abandon the techniques which have served it so well? The lack of understanding of the benefits of continued networking with essential service providers and with other operators in the same sector results in under-performance. We need to build on the experience of incubators to encourage the new enterprise to continually compare performance with market leaders, to share experiences in order to learn from market competitors, and to adapt to new challenges. Remember that in business nothing stands still. Today's best practice is tomorrow's antique. We need to evolve. We are now beginning our next phase of Concerted Actions, which will have an objective of making sure that all these dynamic young fledglings, which hatch from your incubators, can fly safely both on their own and in the flock. The incubator s methodology is one that should send them off with the necessary means to survive, and I trust that your deliberations will permit us to tell the rest of the EU where to look for such a best practice and how to achieve it. On this occasion the European Commission is an anxious student and you are our teachers. I look forward to learning from you. -6-

12 Seminar Introduction Dr. Klaus Plate, Managing Director, CEO, Technologiepark Heidelberg GmbH, Germany The International Association of Science Parks, IASP, is the organisation of Science and Technology Parks with a genuine world-wide character. IASP has about 200 members in 43 countries as well as contacts and associates in many more. The IASP is a non-profit organisation. The key words of IASP are: International Networking Innovation New Business Opportunities. The main objectives of IASP are: - To assist the development of new Science & Technology Parks and incubation projects. - To promote world-wide networking amongst innovation actors and managers. - To transfer to our members all our know-how and expertise. - To support our members tenants. - To be represented in the most prestigious international organisations. In 1998 the IASP European Division conducted a survey on Science and Technology Parks in Europe. It is a survey from the tenant's point of view. Technical data (companies): Population: Sample: 800 Real Sample: 446 Date: April - June Geographical distribution of the real sample: South Europe (41 %) North Europe (17 %) Central Europe (35 %) East Europe (7 %) Most of the tenants (more than 75 %) entered their parks within the last 5 years. As the parks themselves have been established 10, or even 15 years ago, these figures show that the parks act mainly as incubator centres, hosting their tenants for about 5 years. It is understandable that approximately 70 % of the parks tenants have not more than 20 employees, 35 % have only up to 5 employees. One of the main questions in the survey was to ask the tenants which factors had been important for choosing to locate in a Science or Technology Park. From the companies point of view there is the following ranking: -7-

13 1. Prestige 2. Physical Infrastructure 3. Value added services 4. Links to Universities 5. Geographical location 6. Potential clients 7. Common services It is understandable that a special prestige, physical infrastructure and value added services, as well as links to universities, are of high interest for start-ups and small companies at the beginning of their economic development. This mirrors again the special role of Science and Technology Parks as a birthplace of new entrepreneurs and a hut house for growing companies. The survey included an evaluation of the existing services in the European Science and Technology Parks from the tenants point of view. The answers showed a wide variety, giving different comments to training programs, seminars and conferences, availability of lab facilities, and information and documentation. The value of Internet accessibility and being in a network of co-operation was indicated as a high value (76 %). Aside from that, meeting rooms, office services and, for example, parking were nominated as necessary common services. The tenants also considered these other existing services useful: - Sport facilities - Postal services - Banking services - Venture Capital Funds. Relations with institutions are important for the tenants in the European Science and Technology Parks (very important/crucial: 46 %, some importance: 38 %). Close to these figures is the importance of internationalisation (very important/crucial: 27 %, some importance: 41 %). Looking at the main results of the survey, it can be summarised that when comparing the different degrees of importance, which were attached to the various activities of the companies, along with the special significance of checking the crucial box, we can observe that a very large percentage of companies consider that being in a Park has a special relevance for them. Science Parks are prestigious for start-ups and offer an infrastructure that growing companies benefit from. By this, it is not suprising that the survival rate of companies in Science and Technology Parks is significantly higher than of those outside the Parks. The idea to establish incubators has been proved successful. They should be supported by the science and business community, as well as by the government, enabling them to develop their future close to the needs of the tenants. -8-

14 Report from the discussions Workshop 1: Finance for Incubator Infrastructure and Innovation Support Chairman: Dr Erkko Autio, London Business School, UK. Rapporteur: Peter Kelly, Helsinki University of Technology, Department of Industrial Management and Engineering, Finland. In our plenary session briefing the Chairman identified a number of issues as focal points for the workshop discussions, including: The public sector s role in funding incubator infrastructure; Mechanisms for encouraging private sector involvement; The linkage of individual incubator initiatives as a means for achieving critical mass; Understanding the role of business incubators within a broader system of innovation support Our workshop featured five presentations that provided an opportunity to tap into experiences in four countries, including the UK, Austria, France, and Finland. Deidre Griffith described for us an emerging and comprehensive incubator proposal being undertaken in Northern Ireland. As part of the steps taken to secure peace in the region, the government has established funding mechanisms to support research and development activities (Compete scheme), an R&D Challenge fund scheme aimed at encouraging universities to commercialise their research, and the establishment of a 10 million science park. In the embryonic stages, government has a key role to play in developing the innovation support infrastructure. In the question session, the rapporteur discussed the recently launched UK Challenge Fund scheme that aims to establish pre-seed venture capital funds at leading universities to assist in the transformation of good ideas into good businesses. Erhard Juritsch provided an overview of a virtual technology park based in the Carinthian region of Austria. With a server based in Wolfsberg, entrepreneurs are able to share information electronically without the need for the incubator project manager to invest substantial resources into bricks and mortar. The project is 50% subsidised by the public sector with the remainder paid in the form of annual subscription fees from users. The discussion that followed focused on the need to view virtual solutions as part of the comprehensive product and service offering as sentiments were expressed that face-to-face networking is a crucial element of the incubator concept. With seventeen subscribers at the moment, critical mass is a problem but -9-

15 there appeared to be scope to use virtual solutions to link the activities of individual incubator projects together more closely. Alain Andre outlined the development of a substantial incubator project in the south of France, Sophia-Antipolis. Sophia-Antipolis manages facilities, organises seminars, supports educational programs and research, and provides state-of-the-art multimedia services to its tenants. The multimedia industry is a key focal point for their project, a sector that has proven attractive to both start-ups and large established firms alike. In its eighth year of operation, Sophia-Antipolis is now in a break-even situation that demonstrates the long lead times required to achieve critical mass and commercial viability. Public sector funding proved to be absolutely vital in the early stages, as it is only now that the private sector is demonstrating an interest in investing in the expansion of this project. Nicholas Falk provided the workshop with an interesting overview of many projects that his firm has been involved with in the UK over the past few years. Public funding support in the early stages has been absolutely vital in his experience, as many of the projects his firm has been involved with only realise their full potential in ten to twenty years time. Many of the projects he described were developed in stages and highlighted the importance of viewing an individual project within the broader context of a region s development strategy. Tax incentives for private investors to participate in these projects could make a huge difference as it is difficult to attract private capital into situations where tenants have flexible lease arrangements and are of questionable perceived creditworthiness. Taavetti Mutanen provided an overview of the business incubator projects operating in the Uusimaa region of Finland. At present, the public sector provides 50% funding of the incubator manager s salary for the first three or four years in the form of a subsidy while the individual projects proves its viability. Individual project operators in the region have established a network among themselves dealing with issues related to quality of the services offered, the development of training and support services, and identifying promising clients to bring into the incubator system. In many respects, networking has improved the quality and breadth of services offered in the region in a manner that simply would not be financially possible for a single incubator manager to undertake alone. He maintained that there is a need for public sector funding support so that the incubator managers can concentrate their efforts on incubating businesses and not on fund-raising. In our discussions, it became obvious that the hands on nature of the business incubation function can place serious growth constraints on the project as a whole. This observation puts into question the issue as to whether an individual project can ever achieve critical mass. Achieving viable mass implies that an individual project achieves a scale that has a demonstrable impact on the economic development of a particular region but that it fails to achieve a large enough scale of operations to become financially self-sufficient. In such circumstances, public sector funding support is critical, however, incubator managers should ensure that their projects are effectively linked into the local innovation system and that networks are exploited to the fullest extent possible to develop high quality training and support services for the benefit of their clients. -10-

16 Conclusions While it was recognised that private sector participation (and funding) was an important goal, in the early stages of development, individual incubator projects suffered from many of the same problems as those of the clients which they are designed to serve. Like any start-up, an incubator in the initial stages has no customers, no cash flow and no critical mass. It will take many years, as in the case of Sophia-Antipolis, to achieve break-even, if ever, and thus there appears to be an important and persistent need for public funding. Our lively discussions on this issue formed the basis of our policy recommendations that are summarised below: 1. Provide patient public funding support for incubator projects. 2. Establish clear criteria for public funding support. 3. Facilitate the development of networks of individual incubator projects with the aim of achieving critical mass sufficient to attract the private sector, particularly in the development of training and support services. 4. Encourage, through tax incentives, greater private sector funding of incubator projects recognising that such funding may not be forthcoming until the project is fully developed and mature. -11-

17 Report from the discussions Workshop 2: Good practice in Incubator Infrastructure and Innovation Support Chairman: David Irwin, Chairman, National Federation of Enterprise Agencies, UK Rapporteur: Dr Peter van der Sijde, University of Twente, The Netherlands. Introduction According to the definition of the European Commission (OJ C186 51/52, dd. 27 July 1990), a business incubator is a place where newly created firms are concentrated in a limited space. Its aim is to improve the chance of growth and rate of survival of these firms by providing them with a modular building with common facilities (telefax, computing facilities, etc.) as well as with managerial support and back-up services. The main emphasis is on local development and job creation. The technology orientation is often marginal. In the workshop many of these aspects were discussed in view of good and/or best practices. The first distinction was made between (a) common business support agencies and (b) a business incubator. Both provide (start-up) companies, to a greater or lesser extent, with: Common services Finance (directly or in partnership) Advisory services including consultancy and training Networking and connections A business incubator distinguishes itself from an agency simply providing common business services in the following: Physical infrastructure Mix of new and existing companies to encourage mutual learning Promoting clustering of complementary businesses where possible and appropriate. Comparing the EC definition with practice, such as was presented in the workshop, one very important difference is the following: in the EC definition one defines an incubator as the place for newly established companies; in the workshop it appeared that good practice means aiming for a mix of existing and start-up companies. This mix has two advantages: It stimulates mutual learning. The incubator is not externally seen as the centre for start-up companies, and therefore, a lack of confidence from potential customers that might have been felt, will not be. As a result, an incubator should not include the word incubator in its name, in order to provide a good and stimulating environment for starting companies. -12-

18 Whilst it is abundantly clear that incubators have been successful in establishing and nurturing new businesses, often with considerable jobs created, they are nevertheless still only catering for a small part of the market. This does not negate in any way the contribution that they can make to economic regeneration, but little is known about their real impact. Questions which have not been answered satisfactorily include, for example, assessing the overall impact that incubators have, in terms of businesses assisted and jobs created directly as well as jobs created indirectly in supplier businesses; along with considering whether those starting in incubators would have started anyway, but whether the incubator enables them to be more effective and faster. This leads to two recommendations for the EU: Recommendation to EU 1. An impact study on incubators should be carried out 2. Undertake a benchmarking study (perhaps by a small group of incubator managers) with the objective of preparing a manual of good practice, available in both hard copy and via the internet, that can be made available to anyone running or starting an incubator Good practice instead of best practice Good practice ought to be divided in two topics, as was brought into the discussion by David Irwin: The management of the premises (real estate) The support to tenant companies During the discussions and presentations it appeared that there is a third topic for incubator managers to consider: To encourage people to start a company of their own The management of the premises is a commercial affair and is the prime interest of the managers of the incubators. In the discussion about the access criteria, it was mentioned that sometimes you just can not be too choosy: there is an incubator to run. The other two topics will be dealt with more extensively. The pre-incubation stage of companies Mr Møller presented a Danish initiative focussed on prime pumping money and seed capital. The prime pumping money is given to starting entrepreneurs for elaborating an idea into a more feasible design for a company. The access to this particular kind of money is via the Research Park and Institutes of Technology in the Copenhagen area, with the sums amounting to approximately 7,000 ECU. At a later stage there is also seed capital available (up to 100,000 ECU) via the organisation, University Innovation. Also, in the Taguspark in Portugal (Mr. Verella) attention is given to this preincubation stage via the incubator of ideas. Ms. Norrman (Västeräs Technology Park in Sweden) introduced the intentions to train people from the university (and also some outside) in entrepreneurship and to encourage them to start a company. Mr. Peltonen (Jyväskylä) discussed a concrete example of how they worked to establish a company. He spoke about finding ideas, motivating entrepreneurs, and financing the feasibility. -13-

19 Mr. Hussla (IZET) talked about bringing together (academic) technology with the market of a company. Although all presenters addressed different topics to deal with in the pre-incubation period, it was considered to be a major topic and issue for (managers of) business incubators. Summarising the issues: Entrepreneurs (how to find and motivate them) Training (provide training to prospective entrepreneurs) Ideas (how to find good ideas, e.g. in universities, research institutes and large(r) companies, and how to match them with entrepreneurs) Money (prime-pumping money to explore the feasibility or prepare a prototype or protoservice) In other words, one could formulate, as a good practice in incubators, that they are able to find persons, preferably with business ideas, who would like to be entrepreneurs, train them in entrepreneurship and provide them with some money to test the feasibility in the market place. This is exactly the scope of the TOP (temporary entrepreneur positions)-programme of the University of Twente: it stimulates entrepreneurial people (graduates, staff) with ideas, provides training opportunities, an interest free loan, and access to the university resources. Recommendations to the EU 3. Provide finance for feasibility studies and business plan development for new companies 4. Encourage educational institutes to be available to assist prospective entrepreneurs when asked. Ad 3: From the presentations and discussion, it became clear that (quick) access to small amounts of money to stimulate the creation of businesses is of extreme importance. The EU should set up a chain of local (or regional) distribution channels (in existing organisations, preferably in existing incubators) for small amounts of money to test the feasibility of an idea in the market and the development of a business plan. Such an initiative should not turn into a difficult and bureaucratic affair. Ad 4: There are already some universities and other higher educational institutes in Europe, as well as initiatives that focus on these institutions, that are involved in the creation of spin-off companies or the support of future entrepreneurs. Not all of these institutions see it as their task to be involved in these matters. We propose to not only limit this to institutes for higher education, but rather to involve any educational institute. As a recommendation, we suggest that educational institutes should be encouraged to become involved when they are asked. Incubation stage of companies For start-up companies, an incubator, perhaps called a business centre, provides an environment that they can share with already established companies. [NB. One issue that was more mentioned rather than discussed, was, how long is a start-up company a start-up company. The answers varied up to 60 months.] The mix of existing and start- -14-

20 up companies have a number of advantages, e.g. the stimulation of co-operation in larger projects (as e.g. in the Portuguese example). Also a business centre should be able to encourage and bring into contact starting companies and their customers. Hussla (IZET, Germany) mentioned the co-operation between a starting company and a launching customer that was financially supported via the First Users Action (FUSE). A business centre can, via its services, also play an important role in the promotion of its companies and their products. Peltonen (Jyväskylä Science Park) provided one example of this, in which the company HGR received the Productive Idea award of the Chamber of Commerce in the Central Finland. In general we can deduce from the presentations, and this was also extensively discussed, that the value of the networks, connecting people, and money, meaning financial aid, is to stimulate innovation. We will elaborate on this in the form of recommendations. Recommendations for Incubators / Business Centres 1. Build, maintain and utilise networks 2. Develop cross-border partnerships 3. Assist tenants to identify and develop their own partnerships 4. Strive to establish appropriate finance arrangements to benefit tenants Recommendations for the EU 5. Facilitate web site to enable incubator tenants to engage in cross-border cooperation 6. Provide finance to stimulate innovation amongst small businesses Ad Networks: Networks of people are important for doing any business. The incubator ought to be (more?) involved in building, maintaining and utilising networks with both companies, as well as with other incubators in Europe. These networks can, and ought to, develop into regular connections between people in the companies in the incubators. Such networks should be supported, e.g. by the World Wide Web and the Internet. The EU may provide such support, but it is for the incubators and their management to implement and to use it for the benefit of the tenant companies. Ad Finance for innovation: Finance for innovation and innovative products and projects could support the development of starting companies into growing companies. The EU should create funds for small companies (not for SMEs in general) to engage in the development of innovative products and projects (together with a launching customer). Such funds should not be bureaucratic and with long application procedures. The EU should explore the possibilities to use the incubator managers as their agents for such funds. Also, incubator managers ought to look for funds for this purpose to the benefit of their customers. -15-

21 Report from the discussions Workshop 3: The Role of Incubator Infrastructure as a Facilitator for Technology Transfer Chairman: François-Louis Billon, President, European Business and Innovation Centre Network, France Rapporteur: Dr. Olli Niemi, General Manager, Tampere Technology Centre Hermia Ltd., Finland Technology incubations act as key players for technological innovations. They have a close and a strong relationship with the expertise and research resources of universities. Many of the ideas analysed within incubation activities are coming from the universities and many of the incubation enterprises act as a technology integrator. Those technology integrator companies transfer technology both ways; from the: HISTORIC EVOLUTION OF TECHNOLOGY TRANSFER Academic research Universalism Independence But : - Relative reduction of public financing (Former researchers in industry need of capital) Greater implication in local economy (more frequent individual contacts) Greater implication in teaching (adaptation of the training to the needs in industry) Industrial research and SME Market orientation Acquisition of a dominant position Protection Secrecy Creation of Research Companies Regrouping the SME Creation of Centres of expertise Creation of Incubators PROGRESSIVE MODIFICATION OF THE WAY OF THINKING...AND THE ROLE OF THE INCUBATOR IN ALL OF THAT -16-

22 Summary of the contributions Workshop 3 included five presentations from five different countries. Examples on technology transfer practices and networking were reported from the Netherlands, Italy, Spain, France, and Finland. The managing director of the Business and Technology Centre (BTC) Twente in Enschede, the Netherlands, G. van Driem, was the first speaker in the workshop. His presentation was based on experiences with technology transfer from university to SME's. He discussed why universities should support SME's with Technology Transfer (TT) and the need for universities to change to more entrepreneurial units as their public funding is shrinking. Then he moved on to briefly explain the technology transfer process around the University of Twente. Finally, achieved results up to this point were highlighted. As a result of the TOP programme, basic research of the University is transferred to applied research and practical product development. Now, research companies exist, partly owned by professors, and are developing special processes for SME's. Davide Vidotto, from Polytechnico Milano, Italy, gave a presentation on the implementation of the specific measure for the diffusion of innovation in the Piedmont Region, which is funded by the framework of structural funds. The initiative has a regional dimension and the target beneficiaries are the SMEs in the area of industrial decline. The mission of the project was to improve competitiveness of the Piedmont industry through innovation. Their hope is to set up a virtuous circle, in which the SMEs are able to improve their competitiveness by using the technology or the best practice that is available in the research centre. The research system itself is able to be kept up to date with the needs of industry and is able to reorient its research capability towards those needs. Jesus Casanova, from Asociación Nacional de Centros Europeos de Empreseas e Innovación Españoles (ANCES), Spain, gave a presentation about ANCES. ANCES is a non-lucrative association with its own legal entity, which is comprised of the Spanish BICs (European Business and Innovation Centres). The aim of the association is to promote the development of the Spanish BICs contributing with its experience about the establishments of new small and middle-sized businesses; and to facilitate to its members the systems, services, and activities that will help them to execute their objectives with maximal professionalism and efficiency. The presentation outlined the structure, functions, and the operations of the organisation. A problem with the Business Incubators is the variety of the services and the terminology used. A way to help clarify the definitions, and to increase the quality of the work, is to use standards. Françoise Boivert, Bordeaux- Product Incubator, France, gave a presentation on a standard (NF X ) describing the services provided by an incubator. This standard has been prepared by the French agency AFNOR, which also makes the necessary auditing for certifications. The work is based on the proposal made by the national association of the incubator directors (ELAN). The advantages of such a standardisation include positive effects in the following: development of the services of an incubator, communication between partners, quality, benchmarking, and networking with other incubators. Finally, director Jouni Haajanen, from Kareltek Technology Transfer Centre, Finland, outlined the Finnish technology incubator activities. Nowadays, there are 16 centres -17-